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“Counterattack” of the fast fashion tycoon
The Inditex group, the owner of Zara, is now the world’s largest listed fast fashion company in terms of sales volume. According to Reuters, Inditex is expanding its Lefties brand, focusing on the cheap Gen Z age group to compete with China’s Shein.
Shein’s rapid growth is putting pressure on retailers like Inditex and H&M. Zara has become less attractive in price competition since Inditex began raising brand prices to protect profit margins from inflation. This is also part of the process of shifting towards a higher-end customer approach.
The expansion of Lefties, a denim and dress brand with prices as low as $8.64 and bags for $6, is an important part of the strategy to regain market share from the Chinese fast fashion brand.
Lefties was originally a Zaras’ excess items shop. Currently, the brand has stores in 17 countries, including Egypt, Mexico, Romania, Saudi Arabia, Turkey and the United Arab Emirates.
Lefties’ growth shows that Inditex wants to have a presence in the low-priced segment of the market, even as they have successfully boosted profits at Zara, a company with a much larger scale in terms of sales and number of stores.
Lefties is expanding in the Spanish home market as well as in Portugal, despite many consumers preferring discounted items and Shein’s bottom price pressure on competitors.
In Spain, where Lefties has 25 stores, figures from market research company Kantar show that they increased from about 3.5 million customers in 2019 to 5 million customers in 2023, after Shein with 5.2 million customers.
Swetha Ramachandran, Portfolio Manager at Artemis Fund Managers in London, said the presence of Lefties in some emerging markets shows that this is a way for Inditex to serve shoppers who may be less willing to spend on Zara.
According to Coresight Research, Shein is the world’s largest unlisted fast fashion retailer with an estimated market share of 18%.
How does Lefties attract customers?
On Instagram and TikTok, Lefties uses similar strategies to Shein by inviting micro-influencers in most of their posts – contrasting with the high-end fashion style in Zara’s social media marketing.
Patricia Cifuentes, Senior Analyst at Bestinver Securities, said: “We don’t have much information about Lefties but I think it’s working wonders because it is the only company in the low-price segment with a good online service.”
In Spain, competitor Primark does not offer home delivery, while Shein takes 10 to 12 days to deliver an order, making Lefties an attractive choice for users.
Shein has seen its shopper count in Spain increase to 5.2 million in 2023 from 421,000 five years earlier, still lagging behind Zara and Primark, according to Kantar’s estimates in the market.
Shein said they have no comment on other companies. The retailer said it will open some stores across Europe this year after opening stores in cities including Berlin, London, Paris, and Rome last year.
In Portugal, Lefties even attracted more shoppers than Zara last year, according to a previously unpublished estimate by Kantar.
Last year, Lefties opened its first stores in Romania and Turkey, while adding stores in the United Arab Emirates where they operate through franchise partners.
This is happening even as Zara and other Inditex brands, including Bershka and Pull&Bear, are reducing their global store count. Overall, as of October 31, 2023, Inditex has fewer than 585 stores compared with a year earlier.
In Spain, like Zara, Lefties focuses on large stores in major cities, with the largest flagship store opening in Madrid by the end of 2022.
According to Reuters
